Consolidation continues within the junior mining space, with Nighthawk Gold (TSX: NHK) and Moneta Gold (TSX: ME) the latest names to agree to a merger. The transaction is to consist of an “at-market” merger that will see Nighthawk absorbed into Moneta.
Under the terms of the deal, Nighthawk shareholders are set to receive 0.42 Moneta shares for each share held, resulting in Nighthawk shareholders owning 34% of the resulting company on a fully diluted basis.
The strategic rationale for the transaction is the creation of a stronger Canadian gold developer, with the resulting operator having mineral resources of 7.8 million ounces of indicated gold and 10.0 million ounces in the inferred category. The resources come from the Tower Gold project, which has an NPV(5%) of $1.1 billion based on US$1,600 gold, and the Colomac Gold project, which has an NPV(5%) of $1.2 billion, which is also based on US$1,600 gold. Both projects are at the PEA stage of development, and are estimated to have potential mine lives of 11 years.
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The proposed merger is also said to reduce single asset risk for both firms, while providing synergies in the form of operational efficiencies and reduced G&A, while improving the balance sheet.
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Keyvan Salehi, currently the CEO of Nighthawk, is expected to serve as president, CEO and director of Moneta on a post-transaction basis, while Josef Vejvoda, currently the interim CEO of Moneta, will serve as non-executive chairman. The board is set to consist of seven directors post-transaction, of which four nominees will be selected by Moneta, and three by Nighthawk.
As part of the arrangement, Nighthawk has agreed to conduct a financing for gross proceeds of $12.5 million, at $0.34 per unit. Proceeds are to be used to fund exploration and development of the Tower Gold and Colmac projects, as well as for working capital and general corporate purposes.
Post-transaction, the resulting company is expected to change its name, while conducting a 1 for 2 share consolidation on the Moneta shares.
Closing of the transaction is expected to occur in the first quarter of 2024, with a $4.5 million termination fee also in play.
Nighthawk Gold last traded at $0.395 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
